Calcium (Ca2+) and calmodulin (CaM) signaling has been implicated in the activation of plant adaptation and phenotypic plasticity responses to environmental stimuli, but little is known about the determinants and mechanisms that decode and transduce the Ca2+ signature. Arabidopsis thaliana GT2-LIKE 1 (GTL1) is a trihelix transcription factor that is a negative regulator of drought tolerance and water use efficiency (WUE), and a transcriptional repressor of STOMATAL DENSITY AND DISTRIBUTION (SDD1) that negatively regulates stomatal density. gtl1 loss-of-function T-DNA insertional mutations resulted in reduced stomatal density and transpiration, and improved drought tolerance and WUE, which was attributable to higher expression of SDD1. In vitro DNA-binding and in vivo chromatin-immunoprecipitation assays revealed that GTL1 directly binds to the GT3-box (GGTAAA) in the SDD1 promoter to repress expression. gtl1 constitutively induce SDD1 expression in plants, which is suppressed by GTL1 expression. Similarly, SDD1 expression was higher in gtl1-4 than in wild-type protoplasts and was suppressed by transient GTL1 expression. SDD1 expression was up-regulated by water-deficit or hyperosmotic stress, and induction was inhibited by Ca 2+ channel blockers gadolinium (Gd3+) and lanthanum (La3+) and the CaM antagonist W7, implicating the involvement of Ca2+/CaM signaling. In vitro assays determined that GTL1 binds CaM and the interaction is Ca2+ dependent, and H94 was identified as a CaM binding residue by site-specific mutation analysis. GTL1[H94E] prevented Ca2+/CaM binding while GTL1[H94Q] mutation that did not result in a residue charge difference did not abolish CaM binding. These results and in silico analysis indicated that the basic amphiphilic 2nd &agr;-helix (&agr;2 helix) of the N-terminal trihelix DNA-binding domain of GTL1 was necessary for CaM binding. GTL1 binds to the SDD1 promoter through the interaction with the GT3 cis-element located at -216 bp from the transcription start site. Ca2+/CaM inhibited the interaction between GTL1 and the SDD1 promoter, but did not affect binding of GTL1[H94E] to SDD1. Ca2+/CaM also dissociated GTL1 from the SDD1 promoter. Hyperosmotic stress induction of SDD1 expression was not suppressed by GTL1[H94E] as it was by GTL1. Together, these data support the notion that Ca2+/CaM binding to GTL1 prevents interaction of the transrepressor with the SDD1 promoter, which facilitates expression and negative regulation of stomatal development. This study links Ca2+ /CaM signaling directly to mechanisms that regulate transcription of a gene involved in the response to environmental stimuli